Various hydrostatic tool holders are known, such as that disclosed in U.S. Pat. No. 5,516,243, which has one or more chambers containing a fluid which, when pressurized contracts a relatively thin metal sleeve to engage and firmly hold and locate a tool shank received within the sleeve. While this hydrostatic tool holder is effective and reliable in use, the solid steel sleeve is contracted within its elastic limits and only a very small amount under the pressure of the fluid in use.